Between two worlds: A Chinese student in the US

So where are all the friends?

Around the world, 3.3 million university-level students study abroad. The biggest number come from China, and the most popular destination is the United States. What are their lives like?

In this guest posting, Yeran Zhou, an 18-year-old from Shenzhen in southern China, reflects on his first semester in the U.S.

Mr. Zhou blogs for the Daily Illini, a student newspaper at the University of Illinois.

On August 14, 2010, I boarded a 14-hour flight to America, leaving China for the first time.

I had never been to America before, but people always said I would fit in, mainly because I argued with my  teachers and insisted I wanted to be a filmmaker. So when I was 10, my parents had sent me to weekend classes taught by foreign tutors. After school I spent all my pocket money on pirated Hollywood DVDs and watched every episode of Friends. Soon I concluded that America was a rich and cool country with lots of kids like me.

In ninth grade, I got a taste of how life would be if I stayed on in Chinese education when I took the Zhongkao, a two-day-exam to determine which high schools we could go to. A year of test cramming exhausted me. Upon graduation, the principal told us a harder, crueler test – the  Gaokao – awaited us in three years. And that was when I decided I had to go abroad.

My high school in Shenzhen had a tradition of sending students overseas. Every year some would come back and tell their stories. They said that Chinese students in the U.S. were notorious for only hanging out with each other, but “it can’t be helped”. So when I arrived in America, I was eager to set myself apart from my Chinese peers. I took literature classes, went to dance parties, learned Ultimate Frisbee and blogged for the college newspaper. In other words, I couldn’t wait to be American.

But as it turned out, movies and sitcoms didn’t prepare me for everything in America. In the first week on campus, I was shocked by everyone’s fear of being labeled “antisocial”. Closing the dorm doors was strictly forbidden, and eating alone was to be avoided at all cost. In orientation, there was “Speed Friending”, an activity that turned my brain into an alphabet soup of names and faces.

Back in China, things had worked very differently. Our class of 40 students spent every day together for three years. No one was anxious to make new acquaintances, but everyone always had a couple of intimate friends to talk to.

My old Chinese friends had discussed politics and philosophy, but my new American friends exchanged puns and jokes. American humor was a mystery to me, so a few anxious giggles were usually my only contribution to their conversation. But eventually I discovered that Americans weren’t that hard to impress. “In China there’s no minimum drinking age and I used to get drunk after class,” I would remark casually, and watch their jaws drop.

Meanwhile, the classes were showing me America in a new light. My law professor was infuriated by how often American lawyers put the wrong people in jail. A large part of my literature class was devoted to all the bad things America did to women, immigrants, Native Americans and black people. During discussions my classmates confessed that they somehow felt guilty about being American and growing up in an all-white neighborhood.

I was exhilarated. After all those years spent in a Chinese curriculum, hearing people criticize their own country in class was liberating. With this new freedom to think for myself, I grew more curious and confident every day. I also discovered a passion for books and writing, and spent night after night reading in the library. 

I was adjusting to life in America, but it came with a price. In order to distinguish myself I shunned my Chinese peers, who mostly stayed to themselves. Often I pretended I didn’t speak Chinese at all. One month into the semester, I hadn’t made a single friend from my own country, yet the newspaper editor asked me to blog about Chinese students in America. So I set off to reconnect with my Chinese classmates.

For weeks, I sought them out at coffee shops, in cafeterias, and even on a Chinese social networking website. They told me they were isolated, troubled or sleep-deprived.  Some were terrified of reading and writing assignments. Others were frustrated by not being able to fit in. 

A senior engineering student, for example, told me that it was his father who had made the decision to send him abroad, who chose his school and major, prepared all the paperwork and even wrote the application essay. After coming to America, he avoided all contact with non-Chinese people and spent most of his time alone in the dorm room.

Like him, many Chinese students had been sheltered all their lives. Schools and parents had protected them from life’s choices and uncertainties. Then, suddenly, they found themselves in America, alone and unprepared, caught in a swirl of incomprehensible foreignness.

At the end of my first semester, I no longer tried to pretend to be the same as my American friends. But neither could I say that I truly understood my Chinese peers. So I decided to keep on writing, to tell the stories of my Chinese classmates that they wouldn’t otherwise tell, so that one day the world around me might reconcile.

 Useful links

 OECD work on education, the internationalisation of tertiary education and international migration

 OECD Insights: International Migration

 OECD work on China

The OECD’s Chinese-language site – 网站(中文)

Governance in spotlight at Davos

Davos gets under way this week. If you’re disappointed not to be going, you can at least console yourself by reflecting on all the money you’re saving – at least $71,000, says The New York Times!

What will you be missing? Failures in global governance look set to be a key agenda item for movers and shakers at the Swiss mountain resort this year. What the World Economic Forum defines as “weak or inadequate global institutions, agreements or networks” is identified as one of two “cross-cutting global risks” in the latest edition of the forum’s Global Risks report . (The other is “economic disparity”, which we’ll come back to next week.)

The report’s findings, which were informed by a survey of “580 leaders and decision-makers around the world”, make for gloomy reading, as the BBC says. The problem, says the report, is that while the world has become increasingly interconnected, our capacity for global governance is now “highly fragmented”.

In a sense, this is another of the many fruits of globalisation. On the one hand, the increasing integration of the world economy has brought forward important new economic players like India and China. On the other hand, there’s now a far wider range of economic models on offer and what the report calls a “a growing divergence of opinion between countries on how to promote sustainable, inclusive growth”.

That creates a paradox, says the report, where “the conditions that make improved global governance so crucial – divergent interests, conflicting incentives and differing norms and values – are also the ones that make its realization so difficult, complex and messy”.

Separately, a report released in the run up to Davos shows that levels of trust in business are rising in much of the world, with the exception of the United States. The annual Trust Barometer suggests global trust in business rose two percentage points to 56%, reports the Financial Times ; in the US, however, it fell to 46%, an eight-point drop since 2009.

Overall, NGOs were at the top of the trust scale, on 61%; at the other end were insurers and banks. “Just 25% of Americans and 16% of Britons said they trusted banks to do the right thing,” reports Reuters. In Ireland, the figure was just 6%.

Useful links

OECD: Restoring public trust

Property policies – some renovation required

Spare a thought for Alison O’Riordan. In 2008, she “ploughed in head first” and paid an eye-watering €525,000 – about $700,000 – for an apartment in Dublin. Just two years later, as Irish property prices crashed, neighbouring apartments were fetching less than half that, about €190,000.

As Ms. O’Riordan discovered, she was among the last to be sucked into the Irish property bubble: Fewer than a dozen of the properties in the complex were sold. “Today,” she laments, “the other apartments in my building are filled to the brim with wise renters.”

To buy or to rent? An agonising question, especially when you know that getting it wrong could seriously hurt your finances. But, as the recent crisis demonstrated, such decisions can have a much wider economic impact – look to how countries like Spain, Ireland and the United States cope are still coping with the hangover from property bubbles. That’s one reason why there’s increasing interest in how government policy can shape individuals’ housing decisions and reduce the harmful side effects on the economy.

A new paper from the OECD looks at a number of these issues, and argues for policies that would reduce volatility in home prices and provide greater flexibility for buyers and renters.

Take the decision to buy. In a number of countries, governments have promoted home ownership in recent decades, in part because they believe it gives people a stake in society and promotes responsible citizenship. But at a time of high unemployment, that can have a downside: In effect, people who are tied to their homes – and, in some cases, burdened with negative equity – may be less willing to move to another part of the country to start a new job. 

The solution, says the OECD, is not to discourage home ownership, but to reduce barriers that discourage people from moving. There are many such obstacles, but one striking example is the charges you pay when you buy a new home – stamp duties, property registration, notary and property agency fees and so on. These differ greatly between countries: In Denmark and Iceland, they amount to only about 4% of the value of the property; in Belgium, France and Greece they’re equal to at least 14%.

Another area where government policy can help determine people’s property decisions is taxation. In many countries, the tax system effective encourages people to buy property, typically by providing tax relief on mortgage interest payments. That helps people buy homes, but there can be downsides. Firstly, by making it attractive to take out mortgages, and so cut individuals’ tax burdens, it can encourage property speculation. Secondly, it benefits only people who pay tax; low-paid workers outside the tax net get no benefit.

The OECD paper suggests such tax incentives should be scrapped, and that an investment in property should be treated like any other investment. This, it argues, would curb excessive property investment – and limit price bubbles – and free up funds for investment in more productive areas of the economy.

Useful links

Going for Growth 2011 
OECD work on housing
OECD Insights: From Crisis to Recovery

Haiti earthquake: Independent evaluations needed


Aid arrived, but the capacity to process it was limited

Today’s post is by Hans E. Lundgren and Megan Kennedy-Chouane of the OECD Development Co-operation Directorate

It has been called one of the worst disasters in human history. The earthquake that struck Haiti on 12 January 2010 saw destruction on an unprecedented scale.

Some 230,000 people lost their lives and 300,000 more were injured. Over 1 million people were left homeless.

In response, the international community mounted a massive humanitarian relief effort. The Red Cross, for instance, deployed the single largest country response in its 148 year history. People around the world gave millions in charitable donations and governments pledged $5.8 billion for relief and recovery.

At the peak of the emergency response, four million people received food aid and 1.7 million people were provided with material for basic shelter or tents.  Over time, 158,000 families have been relocated into sturdier transitional shelters. Today, 1.3 million people have access to potable water and one million are using 15,300 newly built latrines. Immunisation against major diseases has been provided to 1.9 million children and hundreds of thousands of children are back in school.

And yet, as the world marks the one year commemoration, many of us are disappointed with the overall result. Over 800,000 people are still living in camps and day-to-day conditions are extremely challenging for many Haitians. Journalists and experts in and outside of Haiti have criticised the United Nations, the donor community and NGOs for failing to improve conditions.

We support lively public debate about the effectiveness of development aid generally and the humanitarian response in Haiti specifically. However, while anecdotes and stories are useful for highlighting individual experiences, these discussions should also be informed by credible evidence – evidence that can be provided through independent evaluation. 

Here are just a few of the insights that evaluations of the earthquake have provided so far:

  • Humanitarian coordination: An independent Real Time Evaluation three months after the quake showed evidence of the recurrent problems of weak leadership and limited collaboration among international humanitarian organisations working in Haiti, despite recent progress in improving the efficacy of the humanitarian system.
  • The role of the government: Pre-existing governance weaknesses in Haiti were compounded by the earthquake.  International groups did not do enough to consult with local and national institutions and engage them in coordination mechanisms. Long-term development cannot be a donor-led process but must be effectively driven by a legitimate government. When formed, the new government will need to act decisively to approve projects, resolve issues around land ownership and set priorities for reconstruction and job creation. (IASC, 2010 and OXFAM, 2010)
  • A challenging urban setting: Reports from the Humanitarian Practice Network and OXFAM  show that delivering water, sanitation and other basic services in a major city presented very different challenges than those arising in rural environments (where humanitarians tend to have more experience). For instance, new solutions had to be found for providing toilet facilities for the hundreds of thousands of people camping amid the rubble or in dense tent cities. Organisations must have the capacity to innovate and work flexibly with local communities to find technical solutions suitable for the physical, social and cultural circumstances of the disaster-affected population.
  • Making the right kinds of donations: The Haiti response operation received tonnes of relief items, but the capacity to process these goods and get them quickly to people in need was limited. This lead to high storage costs, waste and the clogging-up of airports and roads. Some items sent were not appropriate, including expired medication that had to be destroyed. (IASC, 2010) Only goods for which there is a clearly expressed demand, and established means for distribution, should be sent.  (Read more about how best to help.)

These evaluations can be found on the ALNAP Haiti Learning and Accountability Portal. Another source for independent evaluations of development aid is the Development Evaluation Resource Centre (DEReC), hosted by the OECD DAC Evaluation Network.  This is a free online collection containing over 1700 evaluations of humanitarian and development aid programmes, including assessments of past donor efforts in Haiti and reports on other disaster responses.

In the context of broader debates about the adequacy of the Haiti earthquake response, evaluators are providing concrete lessons for the future. Sadly, some of these lessons have been highlighted before (see for example this World Bank Evaluation brief or ALNAP’s earthquake lessons note). We need to focus more on creating incentives to implement lessons, in order to ensure that mistakes are not repeated (again) in future disasters.

Useful links

Read more about Aid and the Haiti Earthquake on the Development Evaluation Resource Centre (DEReC)

Find out how the Haiti Evaluation Task Force is working to encourage credible assessments of the aid response.

What’s gone wrong with microcredit?

Roses have thorns

Five years ago, microcredit was going to “put poverty in the museum”. The concept earned its creator, economist Muhammad Yunus, a Nobel prize and was hailed by aid workers, activists and journalists.

 Today, microcredit – or the provision of small loans to some of the world’s poorest people – gets less glowing coverage: News stories report that it is in “crisis” or a “mess” or “under siege”.   

 What’s gone wrong?

 To some extent, microcredit is a victim of its own success – a process many date to 2005 (which, perhaps ironically, was the UN’s International Year of Microcredit. What was once a niche – often charitable – activity became “a trendy asset class” for professional investors, according to the Financial Times. The numbers are striking – by 2009, the FT reports, “global microfinance had around $12bn in cross-border investment, up from $4bn three years ago”. Worldwide, borrowings are estimated to stand at $65 billion, against $24 billion in 2006.

 The origins of microcredit were more modest, and go back to Yunus and his Grameen Bank, which began as a research project in Bangladesh in the mid-1970s. Yunus’s idea was to provide poor people with small loans at reasonable rates, along with access to banking services and financial advice.

 Integrating poor people into the financial system was an innovation in itself, but Yunus went even further by targeting loans at women, who are often unable to borrow money for a combination of legal and social reasons. More than 90% of Grameen’s borrowers are women, most of whom use the money to start or build up small businesses. A repayment rate of over 95% made Grameen both a social and business success, and the idea went on to be copied across the developing world.

That was true of nowhere more than India, and it’s there where microcredit has hit the buffers. The BBC, and many others, have reported on a “suicide epidemic” among micro-loan borrowers. As more and more lenders entered the market, the initial focus on lending for business purposes faded. Instead, many borrowers took out home loans, and then faced intimidation from lenders to pay back the money. The deaths have fuelled a backlash, with opposition politicians in the Indian state of Andhra Pradesh urging borrowers not to pay back their loans. Repayment rates are reported to have plunged to 20%, and there are doubts about the financial soundness of some lenders.

Sounds familiar? The details may be different, but in a sense India has seen a credit bubble not unlike the subprime and mortgage bubbles that caused so much trouble in Western countries. The danger is that, in India’s case, the crisis will bring down the entire microloan sector, which would be a great pity, especially for people struggling to escape poverty. As The Economist notes, microcredit “is not a magic bullet, but nor is it intrinsically harmful”.

What’s needed to make it work better is a bit more realism. Yunus has doubts about whether microcredit should ever be offered by for-profit operators. “Poverty should be eradicated, not seen as a money-making opportunity,” he believes. However he also accepts that for-profits can play a role, but by focusing primarily on servicing the needs of the poor and not on maximising profits.

Realism would also help when it comes to assessing the impact of microcredit. Claims made for its social benefits at the height of the frenzy were probably overstated. Indeed, a study by Yale’s Dean Karlan suggests that in some cases microcredit can make it harder for people to set up new businesses because lenders primarily give money to existing business owners. 

Microcredit deserves to be seen as part – but only one part – of the solution to poverty. Other financial tools, such as providing poor people with savings accounts and insurance policies, also need to be more widely available.

Despite microcredit’s current woes, it would be a pity to throw it out. Drawing a parallel with the West’s financial crisis, development writer David Roodman argues that “you wouldn’t say that just because of the mortgage crisis, we shouldn’t have mortgages.”

 Useful links

 OECD work on poverty reduction

 The OECD Development Centre

 OECD work on India

 The OECD Social Institutions and Gender Index (SIGI)

 Atlas of Gender and Development  

Banks, bonuses and Basel

It's hard to believe now, but in those days, you had to use your own money

Smoothing his comb-over to a rakish angle, Vinnie settled his beer gut on the bar and waited for the chicks to come running.

Not the most realistic introduction, I agree, but it’s less naïve than: “Realising that taxpayers would be paying for his greed and stupidity until the Universe started contracting again, the banker apologised sincerely and took steps to make sure it would never happen again”.

In fact, as the FT reports, during questioning by a UK parliamentary committee yesterday, Bob Diamond, Barclays’ chief executive, said the time for “remorse and apology” by banks over their role in the financial crisis should end.

That’s right, Bob, let’s try to achieve closure. The businesses that went bankrupt and people who shut the front door on their homes for the last time managed it, so why not the rest of us?

And if grief counselling doesn’t work, you can always retreat into a magic dream world and “make the issue of bonuses go away”. Bob certainly wishes he could, but when you examine his fantasy closely, it’s not as fluffy as it first sounds. It’s the “issue” (all that mean-spirited whinging) he’d like to go away, not the bonuses they pay each other.

The problem is, it’s impossible to stop paying bonuses without “severe consequences” for business and the banking sector. Let’s face it, the kind of talent capable of losing trillions of dollars and bringing the world financial system to the point of implosion in the space of a few days doesn’t come cheap.

It’s as if the crisis never happened, or if it did, that banks and bonuses had nothing to do with it. That’s not the conclusion reached  in 2009 by an OECD study on Corporate governance and the financial crisis: “An area of particular concern in financial firms is whether there is any risk adjustment in measuring performance for the purpose of bonuses”.

In case you’re not clear about what a lack of risk adjustment is, the report gives examples. For instance, despite losing $15 bn in the last quarter of 2008, Merrill Lynch paid out $4-5 bn in bonuses at the start of December before the taxpayer helped with the merger with Bank of America.

Lack of risk adjustment means that the traders and their bosses are more likely to focus on risky short-term schemes that could damage the firm. It also leads to firms overpaying their employees in comparison with their contribution to long-term value creation.

You’d think that proposals to reform the financial sector would deal comprehensively with risk, but as OECD’s Adrian Blundell-Wignall and Paul Atkinson of the Groupe d’Economie Mondiale de Sciences Po show in this paper, the so-called Basel III proposals do not properly address the most fundamental regulatory problem facing the system, namely that the “promises” to repay that make up any financial system are not treated equally.

Here’s what that could mean in practice. Bank A lends $1000 dollars to a company and the rules say it has to hold $80 in capital, so its leverage in this case is a relatively modest 12.5 ($1000 = $80 x 12.5). However, it can pass on the promise to redeem the loan to Bank B.

Bank A now has to cover the capital “weight” of this transaction. Since B is a bank, that weight is fixed at 20%, but not of the original $1000, only of the $80. So Bank A now only has to hold $16.

Bank B doesn’t have to carry the risk either, and can underwrite it with a reinsurance company entirely outside the banking system, and not subject to its rules.

The banks can reduce the capital required from $80 to under $20 and increase their leverage from 12.5 to over 50. Basel III wouldn’t stop this.

Blundell-Wignall and Atkinson conclude that if banks can shift promises outside the bank regulatory system, there’s a strong case for having a single regulator for the whole financial system – and global coordination.

Useful links

OECD work on financial markets

OECD work on corporate governance

A power to transform China’s schools

In this guest posting, Jiang Xueqin, director of Peking University High School’s International Division, looks at how pressure from students and parents is driving reform in Chinese education.

The year 2011 promises to be an exciting one for education reform in China. Last July, the government unveiled its 10-year education development plan, planning more spending and advocating greater experimentation. Education expenditure usually hovers around 3% of Gross Domestic Product, but Beijing aims to now spend 4%. That’s lower than the average 6.2% for developed nations, but it’s still a significant increase. Beijing also promises more local autonomy, which should encourage more competition and diversity.

Concrete action is already being taken. Last November, just after the national education plan was promulgated, I attended two high-level government meetings. In the first, Beijing’s top high schools were told to support and encourage students who wanted to study abroad. I saw that as a sign that China’s leaders recognized that Chinese universities were not producing the managerial and creative talent needed for a 21st century knowledge economy, and so decided that the best short-term solution was to send China’s brightest to the West’s best universities.

In the second meeting, Beijing’s best schools were told to create international divisions as laboratories for reform, and as portals to engage the world. We were told to attract Western experience and expertise in order to reform the public school curriculum, and to educate “globally competitive Chinese citizens.”   

As another sign of how serious Beijing is about education reform, Central China TV’s 7 o’clock news programme, Beijing’s quasi-official mouthpiece, reported on our own high school’s reforms – led by Principal Wang Zheng – to promote freedom and choice, diversity and individuality: No longer do 50 students huddle together diffidently and indifferently, as their teacher lectures to them on multiple-choice test-taking strategies and “correct thinking.” Today, 20 students discuss and debate in groups, as a teacher hovers about, offering advice and encouragement. When the bell rings, students run to science lab or to band practice or to a well-lit study room to check their e-mail.  

Still, there are reasons to wonder about how much is really changing on the ground. (more…)